Yen took a pause. Overview for 20.06.2022

The Japanese yen against the US dollar began the new week with a consolidation. The current quote is 134.74.

The market seems quiet, but there are reasons for it. Firstly, there are almost no serious statistics today, and investors save energy for future volatility. Secondly, all important events have already happened, and market players already have all facts on hands. It is high time to pause and think.

This week, Japan will issue important statistics. Normally, the yen hardly reacts to statistics, but this time, some movements might occur. The question is base inflation in Tokyo. This report is interpreted by investors as a leading indicator before the main inflation release. There are reasons to forecast growth of this index.

If there are confirmations of growth of inflation in Japan, the BoJ will have to change rhetoric and decide on tougher steps.

This might be a starting point for the growth of the yen. Currently, it is quite depressed by the difference in the monetary policies of the Bank of Japan with a negative interest rate and, for example, the Fed that has decided on lifting the rate. In case the BoJ, leaning on the growth of the CPI, will begin to toughen its policy, the JPY will recover.

Naturally, this is not a question of one day. However, the statistics on base inflation in Tokyo scheduled for Friday will at least let us know whether this is possible at all.